Chinese Multibillionaire Defaults On Retail Bonds Due To "Severe Cash Crunch"

Tyler Durden's picture

Italy's Monte Paschi isn't the only institutions that is about to soak retail investors who thought that two bailouts for Italy's third biggest bank in two years wouldn't be followed by a third nationalization in year #3. According to the South China Morning Post, a Chinese multi-billionaire businessman has defaulted on bonds worth a paltry 100 million yuan ($14.4 million) that he raised from retail investors, citing "tight cash flow", according to reports.

Wu Ruilin, chairman of the Guangdong based telecom company Cosun Group, has a personal fortune of 98.2 billion yuan, or just over $14 billion, China Business News (CBN) reported citing an audit by a third party. That makes Wu wealthier than Baidu’s founder Robin Li, who has 98 billion yuan and is ranked 8th on the Hurun Rich List 2016.

And yet, despite the founder's personal fortune, according to a notice put up by the Guangdong Equity Exchange on Tuesday, two subsidiaries of Cosun Group are each defaulting on seven batches of privately raised bonds they issued in 2014. According to the notice, “the issuer had sent over a notice on December 15, claiming not to be able to make the payments on the bonds on time, due to short-term capital crunch.”

The good news, is that Wu is allegedly making unlimited guarantees for the principal and interest on the bonds with, what SCMP calls, "all of his legitimate wealth." Meanwhile, Zheshang Property and Casualty Insurance Company is responsible for the bonding insurance that guarantees scheduled payments of interest and principal on the bond, the notice said.

The bad news is that neither Wu nor the insurer had put the payments into the relevant account by 5 pm on Tuesday, according to the exchange notice. Although the bourse did not specify the value of the bonds, CBN said they were together worth around 100 million yuan.

SCMP adds that calls to Cosun went unanswered on Wednesday.

Philip Sun, an analyst with central China based JZ Securities, said it made no sense for Wu to “purposely defaults on the bonds” as it would “severely affect his credit and make institutional investors panic”, which would create bigger problems for him.

“Either he was building his business on high leverage, or he is determined to count on the insurer, but it is for sure he really has a severe cash crunch,” said Sun. CBN reported, somewhat redundantly, that some investors said they would sue Cosun and Wu Ruilin himself.

Still, one wonders if the (formerly) prosperous company of a Chinese billionaire is on the verge of bankruptcy due to a "severe cash crunch", just how bad is the cash crunch behind the scenes in China, and how much longer can the PBOC keep keep the charade that all is well going?

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svs9000's picture

DOW 1,000,000!!!!

38BWD22's picture

 

 

Bearing Guy has a real problem with deadbeats...  Worse that this Chinese guy is a multi-billionaire.  If he owed me money, I'd be pissed.

 

willwork4food's picture

Very pissed. This guy better make good or perhaps they might find parts of him all over China. What an ass.

abyssinian's picture

Ho Lee Fuk! Dow to ten thao son Naw! 

svs9000's picture

Just looked it up...This dude owns a gold mining company....interesting...

abyssinian's picture

So borrow money to buy gold miners, then default on bonds!   Yellen is taking notes....

Dragon HAwk's picture

What's the point in having Insurance if you don't file a claim once in a while..  has Billions, owes Millions, I smell a skunk in the wood pile..

Akzed's picture

Wu Ruilin, chairman of the Guangdong based telecom company Cosun Group, has a personal fortune of 98.2 billion yuan, or just over $14 billion

 

Not bad for a stinkin commie.

Justin Case's picture

If we are looking for evidence of communism in China, the first and most important place to look is at the economy. The economy in China is now decidedly capitalistic in nature. Average Chinese citizens can start their own businesses and put their income into private bank accounts. Chinese citizens can buy stocks in companies and enjoy the revenues or suffer the losses. Chinese citizens, who always carried a good sense for business but were restricted from entrepreneurship in the past have now been more free to take risks and build successful companies. Thus capitalism has transformed the Chinese economy and changed people’s lives forever.

Some people just can't understand that China now employs capitalist and socialist economic policies! Its ridiculous! How can people be so stupid! China has been reforming from communism for 30+ years now. So many people never change their mind, but never over something so stupid! its not like this is up for debate, 10 minitues on google will show anyone that China is no longer 100% communist.

China is, indeed, going through a transition, but it is not a transition from capitalism to communism. The evidence supports a conclusion that feudal appropriation has prevailed in both agriculture (during the commune-era) and industry (during the SRE-era) in the recent past and is now being displaced by capitalism in industry and increasingly in agriculture. In other words, China is going through a transition from feudalism to capitalism. I just don’t see calling such a transition socialism.

Dilluminati's picture

Sum Mai Ni said: I have some money

HRH Feant's picture
HRH Feant (not verified) Dec 21, 2016 8:52 PM

This does not sound good. What is the next animal spirit after Chinese New Year? Flaming Rooster? Wow. Get ready for China to go up in flames.

Evan Wilson's picture

I bet he really isn't a billionaire, it was just an Enron/Worldcom type of illusion.

 

Pigeon's picture

One day, we'll look back on FB and the rest of these stupid apps / platforms being valued more than oil, autos and other companies that ACTUALLY MAKE SOMETHING, and think "Wow, it only took them 15 years to forget Pets.com?"

buzzsaw99's picture

i'm thinking he's one of those billionaires that end up with all the money but his public companies are worth not jack shit. funny how that works.

Pigeon's picture

He's actually named Jack Dorsey, too?

Pigeon's picture

AND let's not forget this gem from early November - re: Faraday in Nevada and it's "billionaire Chinese backer". Yes, "Ponzi" is used in this article

http://www.reviewjournal.com/business/nevada-official-voices-concerns-ab...

 

CNONC's picture

Wow.  The Apex Industrial Center will have both Faraday, selling moonshine electric cars, and SpaceX, selling a literal pipedream.  A resurrected Enron and WorldCom will fit right in.

kiwigal's picture

There is a definite vibe that was around prior to the 87 sharemarket crash. Historic highs in real estate, the sharemarket at an all time high. Going to be intetesting to see what event brings it all down. Skyrocketing interest rates, maybe. 

FlKeysFisherman's picture

Confiscate his assests and throw him in the gulag.

Publicus's picture

Easy come, easy go. None of it was his in the first place.

CNONC's picture

Hell, most of it never existed in the first place.

SoDamnMad's picture

First you hire a bunch of accountants to sit in a hidden office and create a set of fake books.  With those you go out and have public offerings and raise capital. Then you get most of what you raise and ship it offshore. Use a little bit to keep those accountants updating the cooked books.  Now you tell everyone you are worth 14 billion.   Let's call it MF Global Capital II.  I'm Jon Corzine Ruilin.

scraping_by's picture

We're comfortable with the concept of fake news in politics and diplomacy - Russian hacking, Hillary's pneumonia, Assad's gas attacks, and so on. So what's so outrageous about fake news in financial reporting - Wu's multibillions? In the US, you can pay the rating agencies for a top grade, how about paying a few reporters for a bit of fiction? Smoke and mirrors are for sale around the world.

south40_dreams's picture

No tickee no lawndee

Xena fobe's picture

Now he'll have to sell a few U.S. properties

jplbrmo's picture

Simply put, this piece of shit just ripped of a bunch of people.

whatamaroon's picture

The dummy should have blamed the Russians.

hedgiex's picture

Ponzis are color blind and global. To some extent, it depends on where the Ponzis exists, If they exist in jurisdictions that place the interests of their cronies above that of the reputation of their economies and do not give a flying f... in investing in Trust, you need Global Markets to highlight these fireballs. (Technically known as Sovereign Risk). 

Those who have invested in China must have been sold to trust Chinese corporations governed under Chinese Laws. So no angsts are required, now trust the Chinese Courts. 

 

jplbrmo's picture

Having had several bloody marys since my last post i'm thinking that a clothespin on the end of his pee pee and a lincoln log up his butt would be the appropriate response to this kind of outreagous behavior.

Arnold's picture

Kind of hard on yourself for such a stupid post aren't you?

Scrubbing Bubblez's picture
Scrubbing Bubblez (not verified) Dec 22, 2016 1:25 AM

Jump, you squinty eyed bastards!

Silver Savior's picture

It's all just currency. Nothing to get excited about. It came from nothing after all.